Seoul Stocks Fall 2% on Banking Woes

South Korean stocks finished 2.06 percent lower Wednesday as mounting global banking losses crippled financial shares. The local currency edged up against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) shed 23.2 points to 1,103.61. Volume was light at 329.53 million shares worth 4.09 trillion won ($2.98 billion), with losers outpacing gainers 654 to 199, according to Yonhap News.

"Financial firms were hit hardest by worries over a new global financial crisis, which were exaggerated by overnight banking losses in the U.S.," said Rhyu Yong-suk, an analyst at Hyundai Securities.

KB Financial Group, which controls top lender Kookmin Bank, plunged 4.75 percent to 32,100 won. Shinhan Financial Group dropped 6.03 percent to end at 26,500 won.

Builders also lost ground on lingering concerns over industry-wide restructuring efforts, with leader Daewoo Engineering & Construction sinking 4.14 percent to 9,270 won.

Market bellwether Samsung Electronics dropped 3.34 percent to close at 448,500 won, sending the key index even lower.

Shares of KT, the nation's largest fixed-line operator, gained 5.70 percent to 42,000 won as a planned merger with mobile phone unit KTF is expected to boost its market share. KTF, the No. 2 wireless carrier, also climbed 3.61 percent to close at 30,100 won.

The tech-savvy Kosdaq market closed at 352.43, down 5.76 points from Tuesday's close.

The local currency ended at 1,373 won to the dollar, up 1.5 won from Tuesday's close.